Harbinger Group Inc. Reports Fiscal 2012 Results

  Harbinger Group Inc. Reports Fiscal 2012 Results

Revenues Increase 29% to $4.5 Billion, Reflecting Strong Progress in Insurance
         and Financial Services Group and Consumer Products Business

Net Income Attributable to Common and Participating Preferred Stockholders Up
                              35% to $30 million

Business Wire

NEW YORK -- November 27, 2012

Harbinger Group Inc. ("HGI"; NYSE: HRG), a diversified holding company focused
on acquiring and growing attractive businesses, today announced its
consolidated results for the fourth quarter and full year period ended on
September 30, 2012 (“Fiscal 2012”). The results include HGI’s Consumer
Products business, which consists of Spectrum Brands Holdings, Inc. (“Spectrum
Brands”; NYSE: SPB), and HGI’s Insurance and Financial Services group, which
includes HGI’s Fidelity & Guaranty Life Holdings, Inc. (“FGL”) and Salus
Capital Partners, LLC (“Salus”) operating subsidiaries.

Fiscal 2012 Highlights:

  *Total revenues increased 29% from the year ended September 30, 2011
    (“Fiscal 2011”), primarily driven by growth in the Insurance segment,
    including the benefit of a full year of operations of FGL, which was
    acquired in April 2011.
  *HGI received total dividends of approximately $71 million from its
    operating subsidiaries in Fiscal 2012. In September, Spectrum Brands paid
    a special one-time dividend of $1.00 per share, resulting in approximately
    $30 million to HGI; FGL paid cumulative dividends of $40 million, and
    Salus paid an inaugural dividend of $1 million in its first year of
    operation.
  *Upon completion of a recently announced joint venture with EXCO Resources,
    HGI expects dividends from all subsidiaries to exceed $100 million
    annually and to surpass HGI's existing interest and dividend payments.
  *For Fiscal 2012, the Consumer Products segment recorded record net sales
    of $3.25 billion, a 2% increase from Fiscal 2011; excluding negative
    foreign exchange impact, net sales grew 4% versus prior year.
  *Consumer Products segment operating income grew 32% and adjusted earnings
    before interest, taxes, depreciation and amortization (“Adjusted EBITDA”)
    increased 6% versus the prior year (or 10% excluding unfavorable foreign
    exchange impact) on higher sales, synergy benefits and cost reduction
    initiatives. Adjusted EBITDA margin on a full-year basis approximated 15%
    of sales.
  *Insurance segment products sales for Fiscal 2012 were $1.9 billion, led by
    the successful introduction of Prosperity Elite^SM which resulted in FGL
    solidifying a top ten market position in the competitive fixed index
    annuity marketplace.
  *As of September 30, 2012, HGI’s Insurance segment had a net US GAAP book
    value of $1.2 billion (including accumulated other comprehensive income
    ("AOCI") of $434 million), almost double the book value of $667 million
    (including AOCI of $159 million) at the end of Fiscal 2011. Net unrealized
    gains on available for sale investments were $1.1 billion on a U.S. GAAP
    basis ($1.2 billion on a statutory basis). FGL's investment portfolio
    continues to be conservatively positioned, as it holds cash in excess of
    $1.0 billion, has shortened portfolio duration, and remains well matched
    against its liability profile.
  *Salus, in its first year of operation, originated $260 million of
    asset-based loan commitments, for which $181 million of loans were
    outstanding as of September 30, 2012, and contributed approximately $1
    million to HGI's consolidated earnings for Fiscal 2012.
  *HGI stock price appreciation of 66% from $5.07 to $8.43 per share during
    Fiscal 2012 resulted in a $157 million liability increase related to the
    fair value of the preferred stock equity conversion feature, which
    represents a non-cash charge to HGI's net income.
  *Net income attributable to common and participating preferred stockholders
    increased 35% to $30 million, or $0.15 per common share attributable to
    controlling interest, from $22 million, or $0.11 per common share
    attributable to controlling interest, in Fiscal 2011.
  *The non-cash accretion rate on HGI’s preferred stock decreased from 2% for
    the third and fourth fiscal quarters to 0% commencing in the first quarter
    of fiscal 2013 due to a 163% increase in HGI’s net asset value since the
    issuance of its preferred stock in May 2011 as calculated in accordance
    with the terms of its Certificates of Designation.
  *HGI ended the year with corporate cash and short-term investments of
    approximately $433 million (cash primarily held at HGI and HGI Funding
    LLC), which supports its business strategy and growth of existing
    businesses.

Omar Asali, President of HGI said, “Fiscal 2012 was a year of important
progress for HGI, both on the basis of financial performance, as well as
significant growth at the holding company level and in our core operating
businesses. Our results for the full year demonstrate the value created by
investing in businesses with strong underlying fundamentals and supporting
their growth and success by giving them access to long-term capital and
partnering with high-quality, proven management teams.

“Proof of the compelling value proposition of our investment model can be seen
in the strong performance of our Insurance and Financial Services group,
including the continued success of FGL’s new fixed indexed annuity Prosperity
Elite^SM product. We also launched an innovative new fixed indexed universal
life insurance product that will further strengthen FGL’s life portfolio.

“Spectrum Brands – our Consumer Products business – also performed well,
delivering solid operating income and Adjusted EBITDA growth. Spectrum Brands’
recently announced acquisition of Stanley Black & Decker’s Hardware & Home
Improvement Group will further enhance revenues and cash flows, and add to its
powerful group of consumer brands.

“Finally, we are excited about the new joint venture with EXCO Resources,
announced earlier this month, that will establish and anchor our new Energy
operating business. This transaction will add a long-life, proven conventional
oil and gas business with strong cash flows.

“Overall cash flows from our operating subsidiaries – combined with expected
cash flows from the new joint venture with EXCO – should exceed $100 million
next fiscal year, which would more than cover HGI’s existing annual interest
and dividend payments.”

Detail on Fiscal 2012 Results:

HGI's consolidated revenues for Fiscal 2012 were $4.48 billion, compared to
$3.48 billion for Fiscal 2011. Revenues for Consumer Products, which reflect
the Spectrum Brands business, were $3.25 billion in Fiscal 2012 compared to
$3.19 billion last year, an increase of 2% (or 4% excluding negative foreign
exchange impact). The Insurance and Financial Services group contributed $1.2
billion to HGI’s revenues in Fiscal 2012 compared to $291 million in Fiscal
2011. Insurance and Financial Services group results reflect strong
operational performance and the benefit of a full year of operations of FGL,
which was acquired in April 2011.

HGI’s consolidated operating income was $409 million for Fiscal 2012 compared
to operating income of $164 million in Fiscal 2011. HGI reported consolidated
net income attributable to common and participating preferred stockholders of
$30 million, or $0.15 per common share attributable to controlling interest,
in Fiscal 2012, compared to $22 million, or $0.11 per common share
attributable to controlling interest, in Fiscal 2011.

HGI’s Fiscal 2012 results include an income tax benefit of $85 million,
reflecting the net release of $198 million of valuation allowance by FGL,
which is based on FGL’s assessment of the amount of FGL’s deferred tax assets
that are more-likely-than-not realizable, and a $41 million gain resulting
from a reduction in the contingent purchase price of FGL. These favorable
items were partially offset by the $157 million increase in the fair market
value of the equity conversion feature of HGI’s preferred stock which results
in a charge to earnings.

HGI continued to have a strong financial position to support its business
strategy. At September 30, 2012, HGI had corporate cash and short-term
investments of approximately $433 million.

The non-cash accretion rate on HGI’s preferred stock is determined based on
the value of HGI’s net assets (the “Preferred Stock NAV”) as calculated in
accordance with the terms of the Certificates of Designation of HGI’s
preferred stock. The non-cash accretion rate on HGI’s preferred stock reduced
from 2% for the third and fourth fiscal quarters to 0% commencing in the first
fiscal quarter of 2013 due to an increase in Preferred Stock NAV. The
accretion rate is calculated as of September 30 and March 31 of each year, and
is set for six months after the date of calculation. The Preferred Stock NAV
as of September 30, 2012, calculated in accordance with the Certificates of
Designation, was approximately $1.46 billion. This calculation will result in
a quarterly non-cash accretion at an annualized rate of 0% for the first two
quarters of Fiscal 2013, although it could increase to 2% or 4% in subsequent
periods based upon changes in the Preferred Stock NAV.

Consumer Products:

Consumer Products operating income increased to $302 million in Fiscal 2012
from $228 million in Fiscal 2011, representing an increase of 32% driven
primarily by higher sales and efficiency gains. Consumer Products delivered
record Adjusted EBITDA of $485 million, up 6% year-on-year (or 10% excluding
the negative impact of foreign exchange). Adjusted EBITDA is a non-U.S. GAAP
measure that excludes interest, income tax expense, restructuring and related
charges, acquisition and integration related charges, intangible asset
impairment and depreciation and amortization expenses - see “Non-U.S. GAAP
Measures” and Table 3 for a reconciliation of Adjusted EBITDA to the Consumer
Product segment’s operating income.

Net sales increased $65million, or 2%, to $3,252million in Fiscal 2012 from
$3,187million in Fiscal 2011. Excluding negative foreign exchange impacts of
$73 million, net sales increased $138 million, or 4%. The pet supplies, home
and garden control products, electric shaving and grooming products, and
electric personal care products all reported higher revenues in the full year
compared to the previous year, with the strongest growth in the higher margin
pet supplies and home and garden product lines, which reported year-on-year
sales increases of 6% and 9% respectively, helped by gains due to the
FURminator and Black Flag acquisitions.

Consumer Products gross profit, representing net sales minus cost of goods
sold, for Fiscal 2012 was $1,115million compared to $1,129million during
Fiscal 2011, representing a $14million decrease. Gross profit margin,
representing gross profit as a percentage of net sales, for Fiscal 2012
decreased to 34% from 35% in Fiscal 2011. The decrease in gross profit and
gross profit margin for Fiscal 2012 was driven by $36 million of negative
foreign exchange impacts, a $17 million increase in commodity prices and
higher costs for sourced goods, primarily from Asia, and a $12 million
increase in costs due to changes in product mix. These factors contributing to
the decline in gross profit were tempered by increased organic sales which
contributed $31 million of gross profit and Fiscal 2012 acquisitions which
contributed $23 million of gross profit.

For more information on HGI’s Consumer Products segment, interested parties
should read Spectrum Brands’ announcements and public filings, including
Spectrum Brands’ fourth quarter earnings announcement, by visiting Spectrum
Brands’ website: www.spectrumbrands.com.

Insurance and Financial Services:

Insurance fixed indexed annuities (“FIA”) product sales grew 152% from Fiscal
2011 to $1.6 billion on market share gains by Prosperity Elite^SM indexed
annuities, solidifying FGL’s position as a top ten writer of FIAs, and
bringing total FIA sales in the first nine months of calendar 2012 to over
$1.2 billion. Full year fiscal 2011 FIA sales include $327 million in sales
for the six-month period prior to HGI’s acquisition of FGL. Policy surrenders
were lower than expected as a result of strong renewals of maturing blocks of
multi-year rate guaranteed annuities policies and lower fixed index annuity
surrenders as a result of favorable index credits resulting from strong equity
market conditions. FGL has approximately $17.8 billion of cash and invested
assets under management as of September 30, 2012 compared to $16.6 billion as
of September 30, 2011.

In the first full fiscal year of HGI ownership, the Insurance segment reported
operating income of $164 million for Fiscal 2012 driven by $132 million
realized investment gains net of insurance related intangibles amortization.
The realized investment gains were a result of strategic portfolio
re-positioning trades to shorten the overall portfolio duration in
anticipation of rising interest rates. Additionally, since September 30, 2011,
FGL moved $12.5 billion of assets to in-house management, which reduced
external asset management fees by $4 million.

As of September 30, 2012, FGL’s continued profitability since its acquisition
has resulted in FGL management changing its view with respect to its judgment
regarding the realization of certain deferred tax assets in future years. As a
result of the change in judgment, FGL recorded a $198 million tax benefit due
to a net release of its valuation allowance for Fiscal 2012, of which $186
million was in the fourth quarter.

Adjusted operating income was $62 million (pre-tax) for Fiscal 2012. Adjusted
operating income is a non-U.S. GAAP insurance industry measure that eliminates
the impact of realized investment gains (losses), the effect of interest rate
changes on the FIA embedded derivative liability, and the effects of
acquisition-related reinsurance transactions – see “Non-U.S. GAAP Measures”
and Table 4 for a reconciliation of adjusted operating income to the Insurance
segment’s operating income.

As of September, 30, 2012, the HGI’s Insurance segment had a net U.S. GAAP
book value of $1.2 billion (including AOCI of $434 million), almost double the
book value of $667 million at the end of Fiscal 2011. As of September 30,
2012, the Insurance segment’s available for sale investment portfolio had net
unrealized gains on a U.S. GAAP basis of $1.1 billion compared to net
unrealized gains of $1.2 billion on a statutory basis. FGL's investment
portfolio continues to be conservatively positioned, as it holds cash in
excess of $1.0 billion, has shortened portfolio duration, and remains well
matched against its liability profile.

Recent Business Highlights:

Following the end of Fiscal 2012, HGI made two significant announcements:

On November 5, 2012, HGI announced a joint venture with EXCO Resources, Inc.
(“EXCO”; NYSE: XCO) to create a private oil and gas limited partnership (the
“Partnership”) that will purchase and operate EXCO’s producing U.S.
conventional oil and gas assets for a total consideration of $725 million. The
transaction further diversifies HGI by establishing a new Energy operating
business to complement its Consumer Products and Insurance and Financial
Services businesses. Following the closing of the transaction, which is
expected to occur in early calendar-year 2013, HGI expects dividends from all
subsidiaries to exceed $100 million annually and to surpass HGI's existing
interest and dividend payments. The full press release announcing the
transaction can be found at the Investor Relations section of HGI’s website at
www.harbingergroupinc.com.

On October 9, 2012, HGI’s Spectrum Brands operating subsidiary announced that
it had signed a definitive agreement to acquire the Hardware & Home
Improvement Group (“HHI”) of Stanley Black & Decker, Inc. (NYSE: SWK) for $1.4
billion in cash. The transaction will add a leading maker of residential
locksets, residential builders' hardware and faucets with #1 positions in key
North American markets and a portfolio of renowned brands to Spectrum Brands.
It is expected that the transaction will increase Spectrum Brands’ top-line
growth and margins and be significantly and immediately accretive to Spectrum
Brands’ earnings per share, EBITDA and free cash flow. The transaction, which
includes certain assets of Tong Lung Metal Industry Co. Ltd. (“Tong Lung”), a
Taiwanese manufacturer of residential and commercial locksets, is expected to
close in two stages: The financing and the acquisition of HHI are expected to
close during Spectrum Brands’ first quarter of fiscal 2013 ending December 31,
2012. The acquisition of the Tong Lung assets is expected to occur during
Spectrum Brands’ second quarter of fiscal 2013. Additional detail on the
transaction can be found on Spectrum Brands’ website: www.spectrumbrands.com.

Fourth Quarter 2012 Highlights:

  *Total revenues for the fourth quarter of Fiscal 2012 were $1.2 billion,
    compared to $889 million in the same period last year, an increase of 35%.
  *Net income attributable to common and participating preferred stockholders
    increased to $159 million, or $0.79 per common share attributable to
    controlling interest, compared to a net loss of $107 million, or ($0.77)
    per common share attributable to controlling interest, in the same quarter
    Fiscal 2011.
  *Consumer Products segment recorded record net sales of $833 million in the
    fourth quarter of Fiscal 2012, compared to $827 million last year.
  *Consumer Products segment operating income more than doubled to $68
    million versus $33 million in the prior year driven primarily by the
    non-recurrence of asset impairment charges. Adjusted EBITDA increased 11%
    versus the prior year on higher sales, synergy benefits and cost reduction
    initiatives.
  *Insurance segment reported operating income of $72 million for the fourth
    quarter of Fiscal 2012, compared to an operating loss of $68 million in
    the same period of Fiscal 2011. Adjusted operating income was $19 million
    (pre-tax) for the fourth quarter of Fiscal 2012, compared to $20 million
    for the same period last year. The $1 million decrease is primarily due to
    holding a higher level of excess cash in 2012.
  *Insurance FIA product sales grew 55% from the fourth quarter of Fiscal
    2011 to $260 million on market share gains by Prosperity Elite^SM indexed
    annuities.

About Harbinger Group Inc.

Harbinger Group Inc. ("HGI"; NYSE: HRG) is a diversified holding company.
HGI’s principal operations are conducted through subsidiaries that offer life
insurance and annuity products, and branded consumer products such as
batteries, personal care products, small household appliances, pet supplies,
and home and garden pest control products. HGI is principally focused on
acquiring controlling and other equity stakes in businesses across a
diversified range of industries and growing its existing businesses. In
addition to HGI’s intention to acquire controlling equity interests, HGI may
also from time to time make investments in debt instruments and acquire
minority equity interests in companies. Harbinger Group Inc. is headquartered
in New York and traded on the New York Stock Exchange under the symbol HRG.
For more information on HGI, visit: www.harbingergroupinc.com.

About Spectrum Brands Holdings, Inc.

On January 7, 2011, HGI completed the first step of its business strategy with
the acquisition of Spectrum Brands Holdings, Inc. (NYSE: SPB). Spectrum Brands
continues as a stand-alone company with its common stock traded on the New
York Stock Exchange. Spectrum Brands, a member of the Russell 2000 Index, is a
global and diversified consumer products company and a leading supplier of
batteries, shaving and grooming products, personal care products, small
household appliances, specialty pet supplies, lawn & garden and home pest
control products, personal insect repellents and portable lighting. Helping to
meet the needs of consumers worldwide, Spectrum Brands offers a broad
portfolio of market-leading, well-known and widely trusted brands including
Rayovac®, Varta®, Remington®, George Foreman®, Black & Decker®, Russell
Hobbs®, Toastmaster®, Farberware®, Tetra®, Marineland®, Nature’s Miracle®,
Dingo®, 8-in-1®, FURminator®, Littermaid®, Spectracide®, Cutter®, Repel®, Hot
Shot® and Black Flag®. Spectrum Brands' products are sold by the world's top
25 retailers and are available in more than one million stores in
approximately 140 countries. With nearly 6,000 employees in 43 countries,
Spectrum Brands generated net sales of approximately $3.3 billion in Fiscal
2012. For more information, visit: www.spectrumbrands.com.

About Fidelity & Guaranty Life

On April 6, 2011, HGI completed the acquisition of the U.S. annuity and life
insurance business of Old Mutual. Under new ownership, the companies have
adopted a new corporate identity, Fidelity & Guaranty Life, as well as new
insurance company names: Fidelity & Guaranty Life Insurance Company and
Fidelity & Guaranty Life Insurance Company of New York. Headquartered in
Baltimore, MD, the company focuses its efforts on serving middle market
consumers seeking the safety, protection and income features of secure life
insurance and annuity products. Products are distributed through Fidelity &
Guaranty Life’s established, independent network of master general agents.
Fidelity & Guaranty Life has approximately $17.8 billion of cash and
investment assets under management as of September 30, 2012. For more
information on Fidelity & Guaranty Life, visit: https://home.fglife.com.

Forward Looking Statements

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of
1995: This document contains, and certain oral statements made by our
representatives from time to time may contain, forward-looking statements,
including those statements related to the transactions with regards to the
Partnership and HHI. Such statements are subject to risks and uncertainties
that could cause actual results, events and developments to differ materially
from those set forth in or implied by such statements. These statements are
based on the beliefs and assumptions of HGI’s management and the management of
HGI’s subsidiaries (including target businesses). Generally, forward-looking
statements include information concerning possible or assumed future actions,
events, results, strategies and expectations and are generally identifiable by
use of the words “believes,” “expects,” “intends,” “anticipates,” “plans,”
“seeks,” “estimates,” “projects,” “may,” “will” “could,” “might,” or
“continues” or similar expressions. Factors that could cause actual results,
events and developments to differ include, without limitation: the risk that
closing of the transactions with regards to the Partnership and HHI will not
occur, will be delayed or will close on terms materially different than
expected, including, in the case of the Partnership transaction, as a result
of title and environmental diligence of properties to be acquired, commodity
price risks, drilling and production risks, related financing plans, reserve
estimates and values, statements about the Partnership’s properties and
potential reserves and production levels. Other factors could cause actual
results, events and developments to differ include, without limitation: the
ability of HGI’s subsidiaries (including, target businesses following their
acquisition) to generate sufficient net income and cash flows to make upstream
cash distributions, capital market conditions, HGI and its subsidiaries
ability to identifying any suitable future acquisition opportunities,
efficiencies/cost avoidance, cost savings, income and margins, growth,
economies of scale, combined operations, future economic performance,
conditions to, and the timetable for, completing the integration of financial
reporting of acquired or target businesses with HGI or HGI subsidiaries,
completing future acquisitions and dispositions, litigation, potential and
contingent liabilities, management’s plans, changes in regulations, taxes and
the those forward looking statements included under the caption “Risk Factors”
in HGI’s Annual Report on Form 10-K for fiscal year ended September 30, 2012.
All forward-looking statements described herein are qualified by these
cautionary statements and there can be no assurance that the actual results,
events or developments referenced herein will occur or be realized. HGI does
not undertake any obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events or changes
to future operation results.

Non-U.S. GAAP Measures

Management believes that certain non-GAAP financial measures may be useful in
certain instances to provide additional meaningful comparisons between current
results and results in prior operating periods. Spectrum Brands uses adjusted
earnings before interest, taxes, depreciation and amortization (“Adjusted
EBITDA”), a non-U.S. GAAP financial measure. Management believes that Adjusted
EBITDA is significant to gaining an understanding of Spectrum Brands’ results
as it is frequently used by the financial community to provide insight into an
organization’s operating trends and facilitates comparisons between peer
companies, since interest, taxes, depreciation and amortization can differ
greatly between organizations as a result of differing capital structures and
tax strategies. Adjusted EBITDA can also be a useful measure of a company’s
ability to service debt and is one of the measures used for determining
Spectrum Brands’ debt covenant compliance. Adjusted EBITDA excludes certain
items that are unusual in nature or not comparable from period to period. See
Table 3 for a reconciliation of Adjusted EBITDA to the Consumer Products
segment’s operating income. FGL uses adjusted operating income, a non-U.S.
GAAP financial measure frequently used throughout the insurance industry.
Management believes the adjustments made to reported operating income (loss)
of the insurance segment in order to derive adjusted operating income (loss)
are significant to gaining an understanding of FGL’s results of operations.
For example, FGL could have strong operating results in a given period, yet
show operating income that is materially less, if during the period the fair
value of its derivative assets hedging the FIA index credit obligations
decrease due to general equity market conditions but the FIA liability related
to the index credit obligation did not decrease in the same proportion as the
derivative asset because of non-equity market factors such as interest rate
movements. Similarly, FGL could also have poor operating results yet show
operating income that is materially greater, if during the period the fair
value of the derivative assets increases but the FIA liability increase is
less than the fair value change of the derivative assets. FGL hedges its FIA
index credits with a combination of static and dynamic strategies, which can
result in earnings volatility. The management and board of directors of FGL
review adjusted operating income (loss) and reported operating income (loss)
as part of their examination of FGL’s overall financial results. However,
these examples illustrate the significant impact derivative and embedded
derivative movements can have on reporting operating income (loss).
Accordingly, the management and board of directors of FGL perform an
independent review and analysis of these items, as part of their review of
FGL’s hedging results each period. See Table 4 for a reconciliation of
adjusted operating income to the Insurance segment’s operating income.
Management provides the aforementioned information to investors to assist in
comparisons of past, present and future operating results and to assist in
highlighting the results of on-going operations. While management believes
that non-U.S. GAAP measurements are useful supplemental information, such
adjusted results are not intended to replace U.S. GAAP financial results and
should be read in conjunction with those U.S. GAAP results.

                                                           
Table 1
                                                                       
HARBINGER GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
                                                                   
                                                      September        September
                                                      30,              30,

                                                      2012             2011
                        ASSETS                        (Unaudited)
Consumer Products and
Other:
  Cash and cash                                       $ 408,889        $ 321,352
  equivalents
  Short-term                                            181,828          350,638
  investments
  Receivables, net                                      414,417          394,283
  Inventories, net                                      452,633          434,630
  Prepaid expenses and                                 86,272          143,654
  other current assets
        Total current                                   1,544,039        1,644,557
        assets
  Properties, net                                       214,319          206,799
  Goodwill                                              694,245          610,338
  Intangibles, net                                      1,714,929        1,683,909
  Deferred charges and                                 82,141          97,324
  other assets
                                                       4,249,673       4,242,927
Insurance and Financial
Services:
  Investments:
    Fixed maturities,
    available-for-sale,                                 16,088,913       15,367,474
    at fair value
    Equity securities,
    available-for-sale,                                 248,087          287,043
    at fair value
    Derivative                                          200,667          52,335
    investments
    Asset-backed loans
    and other invested                                 198,868         44,279
    assets
        Total                                           16,736,535       15,751,131
        investments
  Cash and cash                                         1,061,822        816,007
  equivalents
  Accrued investment                                    191,577          212,848
  income
  Reinsurance                                           2,363,083        1,612,036
  recoverable
  Intangibles, net                                      273,543          457,167
  Deferred tax assets                                   279,636          207,729
  Other assets                                         44,622          291,043
                                                       20,950,818      19,347,961
        Total assets                                  $ 25,200,491     $ 23,590,888
                       LIABILITIES
                        AND EQUITY
Consumer Products and
Other:
  Current portion of                                  $ 16,414         $ 16,090
  long-term debt
  Accounts payable                                      325,943          328,635
  Accrued and other                                    336,908         317,629
  current liabilities
        Total current                                   679,265          662,354
        liabilities
  Long-term debt                                        2,150,625        2,032,690
  Equity conversion
  feature of preferred                                  231,950          75,350
  stock
  Employee benefit                                      95,113           89,857
  obligations
  Deferred tax                                          382,390          338,679
  liabilities
  Other liabilities                                    31,897          44,957
                                                       3,571,240       3,243,887
Insurance and Financial
Services:
  Contractholder funds                                  15,290,475       14,549,970
  Future policy                                         3,614,788        3,598,208
  benefits
  Liability for policy                                  91,082           56,650
  and contract claims
  Note payable                                          -                95,000
  Other liabilities                                    714,708         381,597
                                                       19,711,053      18,681,425
        Total                                          23,282,293      21,925,312
        liabilities
                                                                       
Commitments and
contingencies
                                                                       
Temporary equity:
  Redeemable preferred                                 319,225         292,437
  stock
                                                                       
Harbinger Group Inc.
stockholders' equity:
  Common stock                                          1,402            1,393
  Additional paid-in                                    861,191          872,683
  capital
  Accumulated deficit                                   (98,168)         (128,083)
  Accumulated other                                    413,172         149,448
  comprehensive income
        Total Harbinger
        Group Inc.                                      1,177,597        895,441
        stockholders'
        equity
Noncontrolling interest                                421,376         477,698
        Total permanent                                1,598,973       1,373,139
        equity
        Total
        liabilities and                               $ 25,200,491     $ 23,590,888
        equity
                                                                         

                                                               
Table 2
                                                                   
HARBINGER GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                                                                   
                    Three Month Period Ended         Year Ending September 30,
                    September 30,
                    2012             2011            2012          2011
                    (Unaudited)
Revenues:
Consumer Products
and Other:
Net sales           $  832,576       $  827,330      $ 3,252,435   $ 3,186,916
Insurance and
Financial Services:
Premiums               13,127           13,884         55,297        39,002
Net investment         183,676          192,955        722,733       369,840
income
Net investment         155,384          (168,119)      410,000       (166,891)
gains (losses)
Insurance and
investment product    12,090          22,491        40,251       48,915
fees and other
                      364,277         61,211        1,228,281    290,866
Total revenues        1,196,853       888,541       4,480,716    3,477,782
Operating costs and
expenses:
Consumer Products
and Other:
Cost of goods          552,651          546,833        2,136,757     2,058,049
sold
Selling, general
and administrative    232,569         256,648       870,755      947,140
expenses
                      785,220         803,481       3,007,512    3,005,189
Insurance and
Financial Services:
Benefits and other
changes in policy      217,670          117,673        777,372       247,632
reserves
Acquisition and
operating expenses,    24,922           43,795         125,685       72,390
net of deferrals
Amortization of       48,677          (32,455)      160,656      (11,115)
intangibles
                      291,269         129,013       1,063,713    308,907
Total operating       1,076,489       932,494       4,071,225    3,314,096
costs and expenses
Operating income       120,364          (43,953)       409,491       163,686
Interest expense       (56,615)         (56,611)       (251,032)     (249,260)
(Increase) decrease
in fair value of
equity conversion      (32,590)         -              (156,600)     27,910
feature of
preferred stock
Bargain purchase
gain from business     -                -              -             158,341
acquisition
Gain on contingent
purchase price         -                -              41,000        -
reduction
Other income          8,474           (21,881)      (17,473)     (42,743)
(expense), net
Income (loss)          39,633           (122,445)      25,386        57,934
before income taxes
Income tax            (135,887)       (13,351)      (85,282)     50,555
(benefit) expense
Net income (loss)      175,520          (109,094)      110,668       7,379
Less: Net income
(loss) attributable   2,347           (15,869)      21,112       (34,680)
to noncontrolling
interest
Net income (loss)
attributable to        173,173          (93,225)       89,556        42,059
controlling
interest
Less: Preferred
stock dividends and   14,082          13,870        59,641       19,833
accretion
Net income (loss)
attributable to
common and
participating
preferred           $  159,091       $  (107,095)    $ 29,915      $ 22,226
stockholders
                                                                   
Net income (loss)
per common share
attributable
to controlling
interest:
Basic               $  0.79          $  (0.77)       $ 0.15        $ 0.11
Diluted             $  0.78          $  (0.77)       $ 0.15        $ 0.09
                                                                     

                                                  
Table 3
                                                                             
Reconciliation of Adjusted EBITDA of Consumer Products segment to U.S. GAAP
operating income (in millions).
                                                                             
                                   Three Months Ended     Year Ended
                                   September 30,          September 30,
                                   2012      2011        2012      2011
Adjusted EBITDA of
Consumer Products                  $  126     $  114      $  485     $  457
segment
                                                                             
Reconciliation to
reported operating
income:
Reported operating
income - consumer                  $  68      $  33       $  302     $  228
products segment
Add: Other income
(expense) not included                1          (1)         (1)        (3)
above
Add back:
Intangible asset                      -          32          -          32
impairment
Restructuring and                     3          11          19         29
related charges
Acquisition and
integration related                   11         6           31         37
charges
Depreciation and
amortization, net of                 43        33         134       134
accelerated depreciation
Adjusted EBITDA -
consumer products                  $  126     $  114      $  485     $  457
segment
                                                                             

                                                   
Table 4
                                                          
Reconciliation of adjusted operating income (pre-tax) of Insurance segment to
U.S. GAAP operating income (loss) (in millions).
                                                          
                                  Three Months Ended      Year Ended September
                                  September 30,           30,
                                  2012       2011        2012        2011
Adjusted operating
income of Insurance               $  19       $  20       $  62        $  48
segment (pre-tax)
                                                                       
Reconciliation to
reported operating
income (loss):
Reported operating
income (loss) -                   $  72       $  (68)     $  164       $  (18)
insurance segment
Effect of investment                 (60)        11          (132)        (1)
gains, net of offsets
Effect of change in FIA
embedded derivative                  7           57          18           43
discount rate, net of
offsets
Effects of
acquisition-related                 -          20         12          24
reinsurance
Adjusted operating                $  19       $  20       $  62        $  48
income - pre-tax
                                                                       

Contact:

Investors:
Harbinger Group Inc.
Tara Glenn, 212-906-8560
Investor Relations
investorrelations@harbingergroupinc.com
or
Media:
Sard Verbinnen & Co
Jamie Tully/Michael Henson
212-687-8080